Whenever lawmakers negotiate a final Defense spending bill for the coming fiscal year, one of the primary bones of contention will be money enacted in prior fiscal years.

Senate appropriators, in their fiscal 2017 measure (S 3000), would cut more than $4 billion in what they deem as excess funds leftover from prior spending laws, roughly twice the amount found by their House counterparts in their measure (HR 5293). Some of the programs that stand to lose already appropriated money are major weapons initiatives for rockets, ships and warplanes. And the gap between the Senate and House approaches on some individual programs runs into the hundreds of millions of dollars.

Despite the considerable sums at issue, the cuts to previously enacted funds have gone virtually unremarked upon in the press. The proposals are buried in tables located in the committee reports and usually go unexplained even there.

This shadowy subset of the defense budget looms large every year when the spending legislation is drafted. This year, it could be an even more pivotal issue, despite its low profile.

“This will absolutely be part of the negotiations in conference committee because what we are talking about are changes in policy that would redirect how DoD spends money Congress previously appropriated,” said Todd Harrison, a defense budget expert with the Center for Strategic and International Studies.

Billions of Dollars Apart

Senate appropriators cut more from carryover funds than the House because senators had to. The reason: the House bill would siphon money from the Pentagon’s war account to pay for some $15.7 billion worth of programs that were not formally requested, though most of them were endorsed by the armed services. The Senate bill, by contrast, would provide nearly as much additional spending, $15.1 billion, but would pay for it by cuts elsewhere.

By necessity, then, the Senate Appropriations Committee's process of wringing savings out of the Pentagon budget was more rigorous than usual, aides said.

Most of the Senate Appropriations cuts came by providing less than the president wanted in fiscal 2017 for this program or that. But fully $3.8 billion was subtracted in so-called rescissions—cuts to prior year funding. In addition to that source of savings, Senate appropriators discovered scores of millions of dollars more in an equivalent kind of reduction: cuts to fiscal 2017 funds made possible because, appropriators argued, certain programs had an excess of funds carrying over from prior years.

By comparison, the House rescinded just under $2 billion in prior year funds and made fewer carryover reductions in fiscal 2017.

The differences on individual programs are sometimes wide. The Senate made a number of substantial rescissions that the House did not. For instance, the Senate would cut $1.3 billion from a Navy account for upgrading warships that senators believe is underused. The Senate bill also would subtract $400 million from prior appropriations in an account to train and equip Afghan security forces. The Senate bill would remove yet another $400 million in already enacted funds from a program to recruit and train acquisition personnel in the Defense Department.

In a similar vein, the Senate measure would subtract $150 million from the Army’s working capital fund for fiscal 2017 because the pool of money leftover is too large, appropriators said.

Senate appropriators also cut $259 million from the Air Force's F-35 fighter jet program’s fiscal 2017 procurement account due to excess funds carried over from prior years. And they would rescind $120 million in previous appropriations from the Navy program to build P-8A Poseidon aircraft, which conduct surveillance and fight submarines and surface ships.

The Senate bill would subtract fully $495 million from the fiscal 2017 request for an Air Force rocket program, the Evolved Expendable Launch Vehicle initiative, essentially on the grounds that the Air Force was seeking that money to launch satellites before the money was needed. The House spending bill (HR 5293) would cut nearly as much, $478 million, for the same reason.

The Senate Appropriations bill goes further and removes $157 million in previously appropriated funds for one rocket launch under that program. The Air Force initially got that money in the fiscal 2016 Pentagon spending bill but later funded the launch using contract savings. Senate Appropriations staff determined the fiscal 2016 funds could be redirected elsewhere, yet the House bill has no such proposal.

To be sure, the House recommended several rescissions to prior appropriations that the Senate did not. These include a $262 million cutback in the Arleigh Burke destroyer program and $150 million that would be taken from the Navy program to procure electronic warfare planes called Growlers.

Of course, the two bills agreed on hundreds of millions of dollars in rescissions to a number of progams. For example, the two measures recommended roughly similar reductions to the KC-46 tanker, the Counterterrorism Partnership Fund and the Coalition Support Fund.

Reasons to Rescind

Sometimes rescissions simply reflect congressional policy choices that differ from the president’s, says Harrison of the Center for Strategic and International Studies.

In other cases, he adds, appropriators subtract money because of understandable overstatements in budget needs, as when a program has technical problems that were not foreseen when the budget was written or when a contract protest unexpectedly delays an initiative.

Appropriators say they do not have a problem, in many cases, with allowing an excess of previously appropriated funds to carry over to the next fiscal year if it’s deemed necessary to avoid breaks in production or other economic inefficiencies.

But in other cases, appropriators say, the services and Pentagon do not have good explanations for all the funds they seek. They may simply want to retain superfluous money with an eye to shifting it elsewhere later—either within the same program or to other needs. The Pentagon would prefer to recommend where the money would go in this way, although congressional assent is eventually required when the reprogramming, as it’s called, is above certain amounts.

Likewise, lawmakers would prefer to be the ones to decide what to do with the savings, and they want to know it as they write each year’s spending bill, Harrison said.

It is not clear when this year’s version of the Pentagon money bill will be written. The House has already passed its bill. But Democrats in the Senate blocked that chamber from moving to its version of the bill in a July 7 procedural vote.

A continuing resolution keeping the government running past the Oct. 1 start of fiscal 2017 now appears all but certain. It may even extend into the next Congress and administration.